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The euro currency is set for move volatility against the Japanese yen currency as members of the Bank of Japan talked down rates and inflation as the EURJPY pair starts to surge.
Yen weakness, largely provoked by BoJ inaction, has caused a massive reaction in the yen crosses, as other global central bank takes policy action while the BoJ continue with their QE efforts and low rates stance.
After years of being range bound, the EURJPY pair has finally started to breakout. While the EURJPY pair has not seen the moves the USDJPY pair has enjoyed, the range break in genuine.
Worryingly, the ActivTrader Market Sentiment tool shows that some 80 percent of traders are bearish towards the EURPY pair right now. This goes strongly against the fundamentals, and the markets mood.
Such a bearish sentiment skew does not bode well for bears and the EURJPY pair, as historical data has shown that fading one-sentiment skews amongst the retail crowd has proved to be lucrative.
Even know the EURJPY pair is overextended to the upside, the current sentiment skew suggests that the upside can still continue. As retail remaining short is a yellow flag for more losses.
EURJPY Short-Term Technical Analysis
The four-hour time frame shows that the EURJPY pair has ignited a massive, inverted head and shoulders patterns, which are amongst the most bullish price patterns for traders.
According to the size of the pattern, a near 1,000-point price ramp can take place, with 143.00 a possible target. Any dips towards the neckline of the pattern could be a major buying opportunity.
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EURJPY Medium-Term Technical Analysis
Looking at the daily time chart shows that the EURJPY pair has broken above a fallen price channel pattern. The chart actually looks very similar to other yen crosses.
Interestingly, if bulls can hold the price above the 133.00 level then a powerful rally towards the 140.00 level should be expected.
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